Wells Fargo will claw back pay from execs in wake of bogus account scandal

Wells Fargo says its CEO and the executive who ran the bank’s consumer banking division will forfeit tens of millions of dollars in bonuses as it tries to stem a scandal over its sales practices.

The board of directors at Wells Fargo, one of America’s largest banks, said Tuesday that John Stumpf will forfeit $41 million US in stock awards, while former retail banking executive Carrie Tolstedt will forfeit $19 million US of her stock awards, effective immediately. Both are also giving up any bonuses for 2016.

The San Francisco-based bank’s independent directors are also launching their own investigation.

Wells Fargo has agreed to pay $185 million US to settle allegations its employees opened millions of accounts without customers’ permission to reach aggressive sales targets. 

Stumpf has faced bipartisan outrage for his handling of the scandal.

More than 1.5 million bogus bank accounts were set up to meet sales targets, along with more than 500,000 credit cards over a period of at least five years.

Tolstedt left her job in July and is due to retire at the end of the year. According to a letter Wells Fargo sent to U.S. senators last week, her $90 million US in total compensation includes accumulated stock and options she earned during her 27 years with the bank.

Following his 35 years at the bank, Stumpf’s total pay package is reported to be about $160 million US, including stocks and options, based on Wells Fargo share price on Sept. 26 of $45 US.

Stumpf was grilled last week on Capitol Hill by U.S. senators. He apologized for the scandal, but at least one senator said he should resign.

A shareholder class-action lawsuit was filed against the bank, the third largest in the U.S. based on assets, on Monday. The suit, which is yet to be certified, alleges the company misled investors about its financial performance.

Article source: